Health Care

Special report: Emails show Shumlin administration down to the wire on single-payer financing

Gov. Peter Shumlin and his team say they will release their single-payer financing plan by Dec. 30, but as of last week, the Department of Health Reform was still running numbers.

The Shumlin administration continues to explore different economic scenarios, examining the results, and if they’re unsatisfactory, the state will tweak the inputs and start again.

State officials are using the Gruber Microsimulation Model. Robin Lunge, director of health reform, says the model offers Vermont “the best estimate that anyone is able to do” of how people and businesses will respond to a single-payer program.

MIT economics professor Jonathan Gruber is a consultant on Vermont's examination of a publicly financed health care system. Courtesy photo

MIT economics professor Jonathan Gruber is a consultant on Vermont’s examination of a publicly financed health care system. Courtesy photo

But internal documents, originally obtained by the Times Argus, indicate that the financing plan may still need work after it is released. Some 2,300 pages of emails between MIT professor Jonathan Gruber and state officials show that the financing plan may need to be adjusted after it is presented to lawmakers and the public at the end of the month.

In addition, the emails highlight a potential conflict of interest between a contractor and the state, shed insight into how the Shumlin administration is using executive privilege to shield decisions from public view and show that a 2017 launch date for implementation of single payer is in doubt.

The latest revelations come on the heels of an erosion of public faith in Gruber. Last month national news reports put a spotlight on impolitic remarks he made in 2013. Gruber told an audience at the University of Pennsylvania that the Affordable Care Act was enacted because people were kept in the dark. “A lack of transparency is a huge political advantage,” Gruber said. “Call it the stupidity of the American voter, or whatever, but basically that was really, really critical to getting the thing to pass.”

Shortly afterward, the state of North Carolina canceled its contract with Gruber. Soon after, the state of Vermont insisted that Gruber forgo $120,000 in remaining payments toward his $400,000 contract. VTDigger obtained copies of invoices from Gruber that showed insufficient billing detail for the payments he has received.

Last week Gruber apologized in testimony before the U.S. House Oversight Committee saying his remarks were “inexcusable.” Republicans in Congress, however, were not satisfied by Gruber’s apparent remorse. Rep. Darrell Issa, R-Calif., subpoenaed documents related to Gruber’s contracts with the Obama administration and states he has done business with, according to Bloomberg News and The Hill. The subpoena includes a demand for all documents and communications regarding state contracts. Doug Hoffer, the Vermont state auditor, has requested detailed information about the scope of Gruber’s work in Vermont and the names of his student subcontractors. None of that information is included in the invoices Gruber submitted to the state of Vermont.

Lunge says Gruber submitted rounded numbers of hours because he and his programmers worked more hours than the contract would pay for.

Once the gold standard

Gruber’s software is the gold standard for modeling health policy. It has been used by the Commonwealth Fund, the California Health Fund, AFL-CIO, Blue Cross Blue Shield Association, Robert Wood Johnson Foundation and the Small Business Majority among others, according to documents filed with the state of Vermont.

Gruber developed his model in 1999 for the Kaiser Family Foundation, a California-based health policy think tank.

Peter Shumlin signed the historic health care reform act on the Statehouse steps on Thursday. VTD/Taylor Dobbs.

Gov. Peter Shumlin signs the historic health care reform act on the Statehouse steps in May 2011. VTDigger file photo

By the mid-2000s, Gruber had begun to model health policy for states including California, Connecticut, Delaware, Kansas, Michigan, Oregon, Wisconsin and Wyoming. Scott Leitz, CEO of Minnesota’s ACA exchange, called Gruber’s work for his state “irreplaceable” in a letter of reference.

In 2006 Gruber worked with then-Massachusetts Gov. Mitt Romney to model and then implement Massachusetts Health Connector, a precursor to the Affordable Care Act, which has helped the Bay State achieve near universal coverage.

The modeling relies on assumptions and Gruber’s work underestimated the number of people who would seek subsidized coverage. Massachusetts had to raise taxes as well as co-pays and premiums to cover the shortfall.

When Vermont hired Gruber in July the model had been used by 10 other states to gauge the impact of health policies. Gruber’s economic model was also used by Congress and the Obama administration to shed insight into the impact of Affordable Care Act reforms on the economy.

Gruber’s model has improved with use over the past eight years, according to Lunge. Vermont gave Gruber’s model the best chance for success by loading it with state-specific data, instead of relying on national data, she said.

Art Woolf, economics professor at the University of Vermont. Photo by Hilary Niles/VTDigger

Art Woolf, economics professor at the University of Vermont. Photo by Hilary Niles/VTDigger

University of Vermont economist Art Woolf says economic models have their limitations. Modeling is at its best when tracking incremental changes, and breaks down when trying to predict behavior or rapid structural change.

“Whatever numbers they come up with are subject to a very large margin of error,” he said, suggesting that margin could be as high as 20 to 30 percent.

Lunge said she’s not sure “margin of error” is the right statistical construct, but she said some measure would be used to judge the precision of the state’s health reform modeling.

A crucial data point missing

Gruber is using data from a 2012 business behavior survey by Wakely Consulting as well a number of national data sources and previous Department of Labor employer surveys for his modeling forecast that will be presented at the end of the month.

A newer survey that would have provided up-to-date information about potential employer behavior under a single payer plan has been delayed. New survey results from the University of Massachusetts and Wakely Consulting won’t be available until January, after the governor has made his initial pitch to lawmakers on how single-payer should be financed, according to Lunge. The survey got bogged down in deliberations about what questions to ask and how, the emails show.

Lunge downplayed the survey’s significance saying, “I wouldn’t call it a limitation, as much as certainly something we’d want to look at when it’s done and compare it to the assumptions in the model.”

Shumlin’s proposal will be a “starting point” for a debate in the Legislature about how best to pay for the $2 billion program, Lunge says. She says she anticipates a “fluid” legislative process.

If the new employer survey results conflict with the assumptions Gruber uses, then they will be used to recalibrate Gruber’s model and the impact on policy decisions will be re-examined, she said.

In one early email exchange from July 11, Gruber asks if funding could be provided to conduct a survey of Vermont employers.

He writes, “the key behavioral assumption for the model is how many firms will still offer insurance under [Green Mountain Care],” and that “any assumption I make here will be largely guesswork.”

Michael Costa, deputy director of health care reform. File Photo by Hilary Niles/VTDigger.org

Michael Costa, deputy director of health care reform. Photo by Hilary Niles/VTDigger

Michael Costa, deputy director of Health Reform and the project’s tax expert, told Gruber that a group from the University of Massachusetts and Wakely Consulting were already under contract to survey employers. State officials eventually chose to postpone the survey, because the Department of Labor had another survey in the field by the time it was ready, according to Lunge.

No pressure to launch GMC in ‘17?

Shumlin has said frequently that he won’t press forward with single payer until the program is ready.

He would like to begin the state’s transition to Green Mountain Care in 2017, but Vermont’s experience with its exchange has made him wary of planning around a certain date, the governor has said.

Costa puts a finer point on that sentiment in an email to Gruber.

“We have a good relationship with the feds, and we are meeting regularly. Yet, they sometimes struggle to understand exactly what Vermont is doing,” he writes.

“We list 2017, but the exact rollout date is whenever we’re damn well ready given the rocky rollout of VHC and healthcare.gov. The real deadline pressure we feel is to secure a waiver prior to the end of the Obama administration,” he adds.

Costa is referring to a federal waiver to the ACA, which states can’t receive until at least 2017. Shumlin’s health reforms are contingent on the waiver, so ACA subsidies can be used to pay for Green Mountain Care.

“I wouldn’t say there’s no pressure to (launch in 2017),” Lunge said clarifying Costa’s apparently off-the-cuff email comments.

“People want to know the timing and have certainty,” she said.

But Lunge reiterated that Vermont’s experience implementing its still glitch-ridden exchange has made the administration wary of setting deadlines.

“We need to be realistic about timing, but that doesn’t mean there is no pressure. You’ll recall the governor wanted to do this in 2014,” she said, referring to Shumlin’s desire to bypass an exchange altogether and move straight to single-payer.

Privileged to make history

Gruber is a single-payer enthusiast, and he was open about his support for the plan from the beginning of his relationship with the state.

“I think we have the chance to make history here,” Gruber writes in one email.

State officials reined in Gruber’s zeal early on, telling him they could not send him details about the plan before they had a signed contract, otherwise it might not be considered privileged information later on.

“We tend to be cautious,” explained Costa.

Shumlin has kept the development of the financing plan for single-payer a secret. He has refused to release any information about the plan and has defended his use of executive privilege, arguing that he needs space to make difficult decisions before going public with a final product.

State officials insisted on language in Gruber’s contract stating he “may advise the Governor on policy matters related to the project,” with the express intent of blocking access to certain information about his work through public records requests, according to a July 11 email.

Robin Lunge, director of Health Care Reform for the Shumlin administration, speaks at a Vermont Health Connect forum in Montpelier last month. Photo by Roger Crowley/for VTDigger

Robin Lunge, director of health care reform. Photo by Roger Crowley/for VTDigger

Republicans and others calling for Gruber to be fired for his comments at the University of Pennsylvania, seized on a section of Gruber’s contract to argue that Shumlin’s plan would be compromised by his policy input. The governor, meanwhile, rebutted that charge and has said he wasn’t getting policy advice from Gruber.

Lunge maintains that the executive privilege exemption from the Public Records Act still applies because Gruber handles sensitive policy information from the Shumlin administration in order to model potential systems.

“Governors have to have the ability to develop really difficult policy initiatives, and as they develop those policy initiatives, to get it right,” Shumlin said this week after a judge ruled he would not have to release documents to a state rep whose public records request he denied.

“If you can’t have the ability to do that, it’s going to be very hard going forward to do big and bold things in Vermont,” Shumlin added.

Critics and even some of his supporters have argued that Shumlin is losing support for his signature policy initiative by operating in secrecy and not being inclusive in its development.

That’s something he has pledged will change once his proposal is “ready for prime time,” a claim that is undermined by his administration’s concurrently held position that the proposal is just “a starting point.”

Flouting a potential conflict?

In one email, Costa introduced Gruber to Anya Rader Wallack, a paid consultant for Vermont coordinating a $45 million grant to help the state change how health services are delivered and hospitals and doctors get paid.

Anya Rader Wallack

Anya Rader Wallack speaking to reporters in September 2011. VTDigger file photo

Her work is the other half of Shumlin’s reform program, which entails creating a leaner health care system he hopes will eventually be financed largely by Green Mountain Care.

In his introduction, Costa summarizes Wallack’s resume, writing that “She helped pass Act 48 and served as the first chair of the Green Mountain Care Board.”

“Now, she serves as a paid consultant to the SIM project and Dartmouth-Hitchcock. Also, she remains highly influential with the Green Mountain Care Board and remains a player within the Administration,” he continues.

The SIM grant has been part of the development of accountable care organizations in Vermont as well as the saving programs offered to them through the state’s Medicaid program.

Dartmouth-Hitchcock Medical Center gets many of its patients from Vermont, and is a member of the state’s largest ACO, OneCare Vermont. The hospital stands to benefit financially if OneCare’s members realize savings through the program Wallack helped design.

At the time she revealed she was considering a consulting job with Dartmouth-Hitchcock she told VTDigger, “I don’t think anything I’ve done in the past has had any clear advantage for Dartmouth-Hitchcock.”

“I don’t think I’ve had any conflict in the past, and I’ve made clear that if I have any conflict in the future I’ll recuse myself,” she added.

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Morgan True

About Morgan

Morgan True is VTDigger's Burlington bureau chief covering the city and Chittenden County. A Seattle native, he graduated from Boston University with a Bachelor of Science in Journalism before working for several publications in Massachusetts. He came to VTDigger in December 2013 from The Brockton Daily Enterprise, where he covered government, schools and hospitals in a city of about 100,000 people. Before joining The Enterprise, he worked for The Associated Press in Concord, N.H., where he served as a relief reporter in the Statehouse. He previously worked for The Quincy (Mass.) Patriot Ledger and as an intern at the Worcester (Mass.) Telegram & Gazette.

Email: [email protected]

Follow Morgan on Twitter @true_morgan

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